The Japanese Auto IndustryA Window on Japan's Economy.ppt

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1、The Japanese Auto Industry A Window on Japans Economy,Michael Smitka Professor of Economics Washington and Lee Alumni College July 20, 2000,Japans Car Market?!,Enjoy the strong yen!,Big Sale Now!,Price - a mere 16,800,000,Exchange rate: 108 per US$ (Wednesdays rate)Price in dollars: $155,555.55 And

2、this is after the 10% “strong yen“ sale discount!,Luxury Cars arent Representative,Mercedes will sell 50,000 cars in 2000 2.8 million - regular cars 2.0 million - minicars 1.0 million - light trucks 0.3 million - imports,Japanese Auto Firms,Toyota Daihatsu Nissan Hino Honda Nissan Diesel Mitsubishi

3、Motors Suzuki Mazda IsuzuFuji Heavy Industries (Subaru)Defunct: Prince Ohta Kurogane Several others,The Domestic Industrys Geography,Firm All Cars Regular Minicars Toyota 917,120 917,120 Daihatsu 286,555 286,555 Nissan 388,548 388,548 Honda 375,725 223,506 152,219 Mitsubishi 307,949 161,815 146,134

4、Mazda 165,613 142,436 23,177 Suzuki 324,059 324,059 Fuji (Subaru) 151,100 64,799 86,301 Isuzu 35,529 35,529 Cars 3.061 mil 2.043 mil 1.018 m Trucks & Buses 0.051 mil,Import Brands,VW 33,078D/C 28,248BMW 20,110GM 14,217Ford 13,511All less than 1% share in a 3 million car market.,Definitions,Productio

5、n inside Japan versus global production Honda is almost as much American as Japanese! Toyota is rapidly internationalizing,Missing from List?!,Nissan is owned by Renault Mazda is owned by Ford Isuzu is owned by GM Suzuki, Fuji are partly owned by GM Mitsubishi will be owned by DaimlerChrysler Hino &

6、 Daihatsu are now owned by Toyota Nissan Diesel is (?) Volvo,Definitions (ii),Production by Japanese firmsMazda, Isuzu and Nissan are all controlled by non-Japanese companies Suzuki, Fuji Heavy Industries (Subaru) and Mitsubishi have foreign firms as major if not dominant shareholders Only Honda and

7、 Toyota are “Japanese“,Production outside of Japan,NAFTA,EU,Asian expansion,“The“ Auto Industry,888,000 Manufacturing (1.3% of labor force) 262,000 assembly 626,000 parts and body 1,280,000 Sales & Repair (2.0% “ “ “)957,000 Materials (Steel, rubber, paint) 1,106,000 Ancillary (Gas Stations, Insuran

8、ce.) 3,033,000 Transport services (Truck drivers.) 7,260,000 Total - 11% of Labor Force 13% of mfg shipments, 20% of exports,Definitions (iii),Parts versus Assembly Employment is in parts, not assembly Dealerships and repair shops, too Dealerships in Japan are unprofitable! Gas stations, too? Deregu

9、lation has overturned the industry!,Peak 13.5 mil Now 10 mil,Historical Development,Typical LDC Pattern of Industrialization Initial domination by foreign producers Excess entry by “national“ firms and extreme inefficiency under subsequent protectionism Industrial consolidation - the Year 2000 theme

10、! Assemblers going or gone Now its the parts sectors turn,Auto sales,The Japanese market was for trucks until 1968 -businesses were the predominant customermany vehicles were 3-wheelers! Japan was advanced in the late 1920s and 1930s Ford from 1925, GM from 1927 Military halted construction of a new

11、, state-of-the-art integrated Ford plant in 1936 Took 45 years to catch up again!,Cars,Trucks,3-Wheelers,Turning points 1961 cars surpass 3-wheelers 1968 cars surpass trucks,Distinctive Features,Competitiveness Success in American market from late 1970s But in the 1990s poor profitability on a globa

12、l basis, so-so success in the EU,Management details for Q&A?!,Just-in-time kanban methods of production controlRapid product development cycleQuality control techniquesSupplier management / purchasing strategyLabor relations patterns distinctive from those of the US. “Lifetime“ employment system, an

13、nual wage hikes, biannual bonuses,US-Japan Topics (I) Japanese success was due to US!,Japanese entry rode a small car wave We paid Japan off! VER - voluntary export restraint - cum - cartel Our subsidies financed Japans mid-sized cars Japans overseas plants Absent US policy . . . . no Japan?,US-Japa

14、n Topics (II) American revitalization was due to Japan,Until Japanese entry in the 1980s, the Big Three formed a tight cartel Competition forced a reformation the last 15 years Japanese inroads are almost exactly matched by GMs decline US firms superior financial controls helped offset poor manufact

15、uring,The “Bubble“,Japan would rule the world in autos Exports, domestic market boomed in mid-1980s Low interest rates fed the boom So what do you do? - add capacity! 1.5 million units in a shrinking market Now 15 mil units capacity, 10 mil units output Toyota alone has 1 mil units excess capacity,T

16、he “Bubble“ Denouement,Plaza Accord of September 1985 yen appreciated exports fell Domestic asset bubble broke home demand fell Foreign producers recovered skills improved light truck / minivan boom favored them,Todays status,Huge excess capacity within Japan 10 years of delay while hoping for recov

17、er (cf. GM) Little restructuring until 2000, and then only at a few assemblers Aging labor force & population costs will rise demand wont Debt, poor profitability can Japanese firms invest abroad profitably?,Looking Forward,Improved efficiency in Japan? continued exit / restructuring esp. at parts f

18、irms Maturation in other markets international expansion will slow, firms will see occasional sales downturns How to manage a global firm? few precedents in Japan US firms dont always do well, either! (in 2000, Ford in EU) Firms with high export shares (Honda, Mazda) remain vulnerable to exchange ra

19、te swings,Summary & Lessons,Many features of Japan reflect its economic transition from a developing countryThe “bubble“ legacy is still present 10 years laterMaturation will not proceed smoothlyHow similar are the US? Korea? China?,Addenda,GDP growth chart GDP Unemployment Big 3 cartel (oligopoly)

20、era Todays structure - competition galore! Major parts suppliers Sales size Nationality (by headquarters location),GDP growth Mfg growth U,Old Vs New: the Old,GM Ford Chrysler AMC (imports 10% of market) VW (Briefly in Pennsylvania) = Big 3 (+ 1-2 little firms),Old vs. New: the New NAFTA Producers,G

21、M Subaru BMW Ford Isuzu VW (Mexico) Toyota Mitsubishi Saturn (GM) Honda Mazda (AutoAlliance) (Hyundai*) Chrysler Suzuki (CAMI) (VW - US*) Nissan Mercedes-Benz (Volvo*) Big 6 plus The Little 9 firms (plus 13% imports!),Top Suppliers - A Multinational Base (1998 OEM sales; *Subsequent M&A),Delphi $26

22、bil Dana $7 bil Bosch $18 bil Aisin Seiki $7 bil Visteon $18 bil Valeo $7 bil Denso $12 bil Yazaki $6 bil Lear* $9 bil Magna $6 bil JCI $9 bil Mannesmann $6 TRW* $7 bil LucasVarity* $5 US German Japanese Other,Bibliography,David Halberstam, The Reckoning. 1986. A good read, and a good depiction. Mar

23、yann Keller, Rude awakening : the rise, fall, & struggle for recovery of General Motors. 1989. Another good read. See also her Collision: GM, Toyota, Volkswagen and the Race for the 21st Century, 1993. Japan Automobile Manufacturers Association: http:/www.jama.or.jp Includes auto industry overview .

24、pdf file and current statistics,Mike Smitka, Competitive Ties. Columbia University Press, 1989. The parts sector in Japan Department of Commerce, Office of Automotive Affairs: http:/www.ita.doc.gov/td/auto/ US data, links, trade data Keizai Koho Center Japan: An International Comparison (Annual, 1998-2000 available online) www.kkc.or.jp/english/activities/publications/aic2000.pdf Handbook of statistics on social / political / economic facets of Japan. 100 pages of downloadable tables & graphs, most with comparative data for the US and EU.,